Document



(in millions, except share and per share amounts)	September 30, 2019			December 31, 2018
Assets
Current assets
Cash and cash equivalents	$	1,653		$	1,203
Accounts receivable, net of allowances of $61 and $67	1,822			1,769
Equipment installment plan receivables, net	2,425			2,538
Accounts receivable from affiliates	20			11
Inventory	801			1,084
Other current assets	1,737			1,676
Total current assets	8,458			8,281
Property and equipment, net	22,098			23,359
Operating lease right-of-use assets	10,914			—
Financing lease right-of-use assets	2,855			—
Goodwill	1,930			1,901
Spectrum licenses	36,442			35,559
Other intangible assets, net	144			198
Equipment installment plan receivables due after one year, net	1,469			1,547
Other assets	1,799			1,623
Total assets	$	86,109		$	72,468
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	6,406		$	7,741
Payables to affiliates	252			200
Short-term debt	475			841
Deferred revenue	608			698
Short-term operating lease liabilities	2,232			—
Short-term financing lease liabilities	1,013			—
Other current liabilities	1,883			787
Total current liabilities	12,869			10,267
Long-term debt	10,956			12,124
Long-term debt to affiliates	13,986			14,582
Tower obligations	2,241			2,557
Deferred tax liabilities	5,296			4,472
Operating lease liabilities	10,614			—
Financing lease liabilities	1,440			—
Deferred rent expense	—			2,781
Other long-term liabilities	936			967
Total long-term liabilities	45,469			37,483
Commitments and contingencies (Note 12)
Stockholders' equity
Common Stock, par value $0.00001 per share, 1,000,000,000 shares authorized; 857,072,063 and 851,675,119 shares issued, 855,557,671 and 850,180,317 shares outstanding	—			—
Additional paid-in capital	38,433			38,010
Treasury stock, at cost, 1,514,392 and 1,494,802 shares issued	(8		)	(6		)
Accumulated other comprehensive loss	(1,070		)	(332		)
Accumulated deficit	(9,584		)	(12,954		)
Total stockholders' equity	27,771			24,718
Total liabilities and stockholders' equity	$	86,109		$	72,468



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except share and per share amounts)	2019			2018			2019			2018
Revenues
Branded postpaid revenues	$	5,746		$	5,244		$	16,852		$	15,478
Branded prepaid revenues	2,385			2,395			7,150			7,199
Wholesale revenues	321			338			938			879
Roaming and other service revenues	131			89			346			247
Total service revenues	8,583			8,066			25,286			23,803
Equipment revenues	2,186			2,391			6,965			7,069
Other revenues	292			382			869			993
Total revenues	11,061			10,839			33,120			31,865
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below	1,733			1,586			4,928			4,705
Cost of equipment sales, exclusive of depreciation and amortization shown separately below	2,704			2,862			8,381			8,479
Selling, general and administrative	3,498			3,314			10,483			9,663
Depreciation and amortization	1,655			1,637			4,840			4,846
Total operating expense	9,590			9,399			28,632			27,693
Operating income	1,471			1,440			4,488			4,172
Other income (expense)
Interest expense	(184		)	(194		)	(545		)	(641		)
Interest expense to affiliates	(100		)	(124		)	(310		)	(418		)
Interest income	5			5			17			17
Other income (expense), net	3			3			(12		)	(51		)
Total other expense, net	(276		)	(310		)	(850		)	(1,093		)
Income before income taxes	1,195			1,130			3,638			3,079
Income tax expense	(325		)	(335		)	(921		)	(831		)
Net income	$	870		$	795		$	2,717		$	2,248

Net income	$	870		$	795		$	2,717		$	2,248
Other comprehensive loss, net of tax
Unrealized loss on cash flow hedges, net of tax effect of $88, $0, $256, and $0	(257		)	—			(738		)	—
Other comprehensive loss	(257		)	—			(738		)	—
Total comprehensive income	$	613		$	795		$	1,979		$	2,248
Earnings per share
Basic	$	1.02		$	0.94		$	3.18		$	2.65
Diluted	$	1.01		$	0.93		$	3.15		$	2.62
Weighted average shares outstanding
Basic	854,578,241			847,087,120			853,391,370			849,960,290
Diluted	862,690,751			853,852,764			862,854,654			858,248,568



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2019			2018			2019			2018
Operating activities
Net income	$	870		$	795		$	2,717		$	2,248
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	1,655			1,637			4,840			4,846
Stock-based compensation expense	126			115			366			324
Deferred income tax expense	294			284			849			762
Bad debt expense	74			80			218			209
Losses from sales of receivables	28			48			91			127
Deferred rent expense	—			10			—			21
Losses on redemption of debt	—			—			19			122
Changes in operating assets and liabilities
Accounts receivable	(745		)	(1,238		)	(2,693		)	(3,247		)
Equipment installment plan receivables	(78		)	(335		)	(478		)	(843		)
Inventories	(36		)	(115		)	(139		)	43
Operating lease right-of-use assets	491			—			1,395			—
Other current and long-term assets	(118		)	(193		)	(288		)	(309		)
Accounts payable and accrued liabilities	(395		)	(265		)	(339		)	(1,372		)
Short and long-term operating lease liabilities	(549		)	—			(1,592		)	—
Other current and long-term liabilities	42			39			136			(21		)
Other, net	89			52			185			35
Net cash provided by operating activities	1,748			914			5,287			2,945
Investing activities
Purchases of property and equipment, including capitalized interest of $118 and $101 and $361 and $246	(1,514		)	(1,362		)	(5,234		)	(4,357		)
Purchases of spectrum licenses and other intangible assets, including deposits	(13		)	(22		)	(863		)	(101		)
Proceeds related to beneficial interests in securitization transactions	900			1,338			2,896			3,956
Acquisition of companies, net of cash acquired	(31		)	—			(31		)	(338		)
Other, net	1			4			(6		)	30
Net cash used in investing activities	(657		)	(42		)	(3,238		)	(810		)
Financing activities
Proceeds from issuance of long-term debt	—			—			—			2,494
Payments of consent fees related to long-term debt	—			—			—			(38		)
Proceeds from borrowing on revolving credit facility	575			1,810			2,340			6,050
Repayments of revolving credit facility	(575		)	(2,130		)	(2,340		)	(6,050		)
Repayments of financing lease obligations	(235		)	(181		)	(550		)	(508		)
Repayments of short-term debt for purchases of inventory, property and equipment, net	(300		)	(246		)	(300		)	(246		)
Repayments of long-term debt	—			—			(600		)	(3,349		)
Repurchases of common stock	—			—			—			(1,071		)
Tax withholdings on share-based awards	(4		)	(5		)	(108		)	(89		)
Cash payments for debt prepayment or debt extinguishment costs	—			—			(28		)	(212		)
Other, net	(4		)	(6		)	(13		)	(6		)
Net cash used in financing activities	(543		)	(758		)	(1,599		)	(3,025		)
Change in cash and cash equivalents	548			114			450			(890		)
Cash and cash equivalents
Beginning of period	1,105			215			1,203			1,219
End of period	$	1,653		$	329		$	1,653		$	329
Supplemental disclosure of cash flow information
Interest payments, net of amounts capitalized	$	327		$	366		$	912		$	1,303
Operating lease payments ⁽¹⁾	703			—			2,094			—
Income tax payments	5			29			77			40
Noncash investing and financing activities
Noncash beneficial interest obtained in exchange for securitized receivables	$	1,734		$	1,263		$	4,862		$	3,596
(Decrease) increase in accounts payable for purchases of property and equipment	(460		)	78			(906		)	(672		)
Leased devices transferred from inventory to property and equipment	298			229			612			813
Returned leased devices transferred from property and equipment to inventory	(65		)	(74		)	(189		)	(246		)
Short-term debt assumed for financing of property and equipment	475			—			775			291
Operating lease right-of-use assets obtained in exchange for lease obligations	989			—			3,083			—
Financing lease right-of-use assets obtained in exchange for lease obligations	395			133			943			451



(in millions, except shares)	Common Stock Outstanding		Treasury Shares at Cost			Par Value and Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders' Equity
Balance as of June 30, 2019	854,452,642		$	(8	)	$	38,242		$	(813	)	$	(10,454	)	$	26,967
Net income	—		—			—			—			870			870
Other comprehensive loss	—		—			—			(257		)	—			(257		)
Stock-based compensation	—		—			140			—			—			140
Exercise of stock options	19,619		—			—			—			—			—
Stock issued for employee stock purchase plan	955,849		—			55			—			—			55
Issuance of vested restricted stock units	179,155		—			—			—			—			—
Shares withheld related to net share settlement of stock awards and stock options	(53,349	)	—			(4		)	—			—			(4		)
Distribution from NQDC plan	3,755		—			—			—			—			—
Balance as of September 30, 2019	855,557,671		$	(8	)	$	38,433		$	(1,070	)	$	(9,584	)	$	27,771

Balance as of December 31, 2018	850,180,317		$	(6	)	$	38,010		$	(332	)	$	(12,954	)	$	24,718
Net income	—		—			—			—			2,717			2,717
Other comprehensive loss	—		—			—			(738		)	—			(738		)
Stock-based compensation	—		—			404			—			—			404
Exercise of stock options	70,754		—			1			—			—			1
Stock issued for employee stock purchase plan	2,091,650		—			124			—			—			124
Issuance of vested restricted stock units	4,729,270		—			—			—			—			—
Forfeiture of restricted stock awards	(20,769	)	—			—			—			—			—
Shares withheld related to net share settlement of stock awards and stock options	(1,474,011	)	—			(108		)	—			—			(108		)
Transfer RSU from NQDC plan	(19,540	)	(2		)	2			—			—			—
Prior year retained earnings	—		—			—			—			653			653
Balance as of September 30, 2019	855,557,671		$	(8	)	$	38,433		$	(1,070	)	$	(9,584	)	$	27,771



(in millions, except shares)	Common Stock Outstanding		Treasury Shares at Cost			Par Value and Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders' Equity
Balance as of June 30, 2018	847,225,746		$	(7	)	$	37,786		$	—		$	(14,389	)	$	23,390
Net income	—		—			—			—			795			795
Stock-based compensation	—		—			127			—			—			127
Exercise of stock options	36,973		—			—			—			—			—
Stock issued for employee stock purchase plan	942,475		—			48			—			—			48
Issuance of vested restricted stock units	251,953		—			—			—			—			—
Shares withheld related to net share settlement of stock awards and stock options	(77,323	)	—			(5		)	—			—			(5		)
Distribution from NQDC plan	855		—			—			—			—			—
Balance as of September 30, 2018	848,380,679		$	(7	)	$	37,956		$	—		$	(13,594	)	$	24,355

Balance as of December 31, 2017	859,406,651		$	(4	)	$	38,629		$	8		$	(16,074	)	$	22,559
Net income	—		—			—			—			2,248			2,248
Stock-based compensation	—		—			361			—			—			361
Exercise of stock options	174,514		—			3			—			—			3
Stock issued for employee stock purchase plan	2,011,970		—			103			—			—			103
Issuance of vested restricted stock units	4,707,512		—			—			—			—			—
Issuance of restricted stock awards	354,459		—			—			—			—			—
Shares withheld related to net share settlement of stock awards and stock options	(1,481,129	)	—			(89		)	—			—			(89		)
Repurchases of common stock	(16,738,758	)	—			(1,054		)	—			—			(1,054		)
Transfer RSU from NQDC plan	(54,540	)	(3		)	3			—			—			—
Prior year retained earnings	—		—			—			(8		)	232			224
Balance as of September 30, 2018	848,380,679		$	(7	)	$	37,956		$	—		$	(13,594	)	$	24,355

This Quarterly Report on Form 10-Q (“Form 10-Q”) includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including information concerning our future results of operations, are forward-looking statements. These forward-looking statements are generally identified by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “could” or similar expressions. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties and may cause actual results to differ materially from the forward-looking statements. The following important factors, along with the Risk Factors included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018, as supplemented by the Risk Factors included in Part II, Item 1A below, could affect future results and cause those results to differ materially from those expressed in the forward-looking statements:

Investors and others should note that we announce material financial and operational information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We intend to also use the @TMobileIR Twitter account (https://twitter.com/TMobileIR) and the @JohnLegere Twitter (https://twitter.com/JohnLegere), Facebook and Periscope accounts, which Mr. Legere also uses as means for personal communications and observations, as means of disclosing information about us and our services and for complying with our disclosure obligations under Regulation FD. The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts. The social media channels that we intend to use as a means of disclosing the information described above may be updated from time to time as listed on our investor relations website.

On April 29, 2018, we entered into the Business Combination Agreement to merge with Sprint in an all-stock transaction at a fixed exchange ratio of 0.10256 shares of T-Mobile common stock for each share of Sprint common stock, or 9.75 shares of Sprint common stock for each share of T-Mobile common stock. The combined company will be named “T-Mobile” and, as a result of the Merger, is expected to be able to rapidly launch a broad and deep nationwide 5G network, accelerate innovation and increase competition in the U.S. wireless, video and broadband industries. Immediately following the Merger, it is anticipated that Deutsche Telekom AG (“DT”) and SoftBank Group Corp. (“SoftBank”) will hold, directly or indirectly, on a fully diluted basis, approximately 41.7% and 27.4%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 30.9% of the outstanding T-Mobile common stock held by other stockholders, based on closing share prices and certain other assumptions as of December 31, 2018. The consummation of the Merger remains subject to regulatory approvals and certain other customary closing conditions. We now expect the Merger will be permitted to close in early 2020.



	Three Months Ended September 30,						Change					Nine Months Ended September 30,						Change
(in millions)	2019			2018			$			%		2019			2018			$			%
Revenues
Branded postpaid revenues	$	5,746		$	5,244		$	502		10	%	$	16,852		$	15,478		$	1,374		9	%
Branded prepaid revenues	2,385			2,395			(10		)	—	%	7,150			7,199			(49		)	(1	)%
Wholesale revenues	321			338			(17		)	(5	)%	938			879			59			7	%
Roaming and other service revenues	131			89			42			47	%	346			247			99			40	%
Total service revenues	8,583			8,066			517			6	%	25,286			23,803			1,483			6	%
Equipment revenues	2,186			2,391			(205		)	(9	)%	6,965			7,069			(104		)	(1	)%
Other revenues	292			382			(90		)	(24	)%	869			993			(124		)	(12	)%
Total revenues	11,061			10,839			222			2	%	33,120			31,865			1,255			4	%
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below	1,733			1,586			147			9	%	4,928			4,705			223			5	%
Cost of equipment sales, exclusive of depreciation and amortization shown separately below	2,704			2,862			(158		)	(6	)%	8,381			8,479			(98		)	(1	)%
Selling, general and administrative	3,498			3,314			184			6	%	10,483			9,663			820			8	%
Depreciation and amortization	1,655			1,637			18			1	%	4,840			4,846			(6		)	—	%
Total operating expense	9,590			9,399			191			2	%	28,632			27,693			939			3	%
Operating income	1,471			1,440			31			2	%	4,488			4,172			316			8	%
Other income (expense)
Interest expense	(184		)	(194		)	10			(5	)%	(545		)	(641		)	96			(15	)%
Interest expense to affiliates	(100		)	(124		)	24			(19	)%	(310		)	(418		)	108			(26	)%
Interest income	5			5			—			—	%	17			17			—			—	%
Other income (expense), net	3			3			—			—	%	(12		)	(51		)	39			(76	)%
Total other expense, net	(276		)	(310		)	34			(11	)%	(850		)	(1,093		)	243			(22	)%
Income before income taxes	1,195			1,130			65			6	%	3,638			3,079			559			18	%
Income tax expense	(325		)	(335		)	10			(3	)%	(921		)	(831		)	(90		)	11	%
Net income	$	870		$	795		$	75		9	%	$	2,717		$	2,248		$	469		21	%
Statement of Cash Flows Data
Net cash provided by operating activities	$	1,748		$	914		$	834		91	%	$	5,287		$	2,945		$	2,342		80	%
Net cash used in investing activities	(657		)	(42		)	(615		)	1,464	%	(3,238		)	(810		)	(2,428		)	300	%
Net cash used in financing activities	(543		)	(758		)	215			(28	)%	(1,599		)	(3,025		)	1,426			(47	)%
Non-GAAP Financial Measures
Adjusted EBITDA	$	3,396		$	3,239		$	157		5	%	$	10,141		$	9,428		$	713		8	%
Free Cash Flow	1,134			890			244			27	%	2,921			2,332			589			25	%



(in millions, except average number of customers and ARPU)	Three Months Ended September 30,						Change					Nine Months Ended September 30,						Change
(in millions, except average number of customers and ARPU)	2019			2018			$			%		2019			2018			$			%
Calculation of Branded Postpaid Phone ARPU
Branded postpaid service revenues	$	5,746		$	5,244		$	502		10	%	$	16,852		$	15,478		$	1,374		9	%
Less: Branded postpaid other revenues	(346		)	(289		)	(57		)	20	%	(982		)	(820		)	(162		)	20	%
Branded postpaid phone service revenues	$	5,400		$	4,955		$	445		9	%	$	15,870		$	14,658		$	1,212		8	%
Divided by: Average number of branded postpaid phone customers (in thousands) and number of months in period	38,944			35,779			3,165			9	%	38,225			35,067			3,158			9	%
Branded postpaid phone ARPU	$	46.22		$	46.17		$	0.05		—	%	$	46.13		$	46.44		$	(0.31	)	(1	)%
Calculation of Branded Prepaid ARPU
Branded prepaid service revenues	$	2,385		$	2,395		$	(10	)	—	%	$	7,150		$	7,199		$	(49	)	(1	)%
Divided by: Average number of branded prepaid customers (in thousands) and number of months in period	20,837			20,820			17			—	%	21,043			20,737			306			1	%
Branded prepaid ARPU	$	38.16		$	38.34		$	(0.18	)	—	%	$	37.76		$	38.57		$	(0.81	)	(2	)%

Adjusted EBITDA is a non-GAAP financial measure utilized by our management to monitor the financial performance of our operations. We use Adjusted EBITDA internally as a measure to evaluate and compensate our personnel and management for their performance, and as a benchmark to evaluate our operating performance in comparison to our competitors. Management believes analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate overall operating performance and facilitate comparisons with other wireless communications companies because it is indicative of our ongoing operating performance and trends by excluding the impact of interest expense from financing, non-cash depreciation and amortization from capital investments, non-cash stock-based compensation, network decommissioning costs and costs related to the Transactions, as they are not indicative of our ongoing operating performance, as well as certain other nonrecurring income and expenses. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for income from operations, net income or any other measure of financial performance reported in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).



	Three Months Ended September 30,						Change					Nine Months Ended September 30,						Change
(in millions)	2019			2018			$			%		2019			2018			$			%
Net income	$	870		$	795		$	75		9	%	$	2,717		$	2,248		$	469		21	%
Adjustments:
Interest expense	184			194			(10		)	(5	)%	545			641			(96		)	(15	)%
Interest expense to affiliates	100			124			(24		)	(19	)%	310			418			(108		)	(26	)%
Interest income	(5		)	(5		)	—			—	%	(17		)	(17		)	—			—	%
Other (income) expense, net	(3		)	(3		)	—			—	%	12			51			(39		)	(76	)%
Income tax expense	325			335			(10		)	(3	)%	921			831			90			11	%
Operating income	1,471			1,440			31			2	%	4,488			4,172			316			8	%
Depreciation and amortization	1,655			1,637			18			1	%	4,840			4,846			(6		)	—	%
Stock-based compensation ⁽¹⁾	108			102			6			6	%	312			304			8			3	%
Merger-related costs	159			53			106			200	%	494			94			400			426	%
Other, net ⁽²⁾	3			7			(4		)	(57	)%	7			12			(5		)	(42	)%
Adjusted EBITDA	$	3,396		$	3,239		$	157		5	%	$	10,141		$	9,428		$	713		8	%
Net income margin (Net income divided by service revenues)	10		%	10		%				0 bps		11		%	9		%				200 bps
Adjusted EBITDA margin (Adjusted EBITDA divided by service revenues)	40		%	40		%				0 bps		40		%	40		%				0 bps

Our principal sources of liquidity are our cash and cash equivalents and cash generated from operations, proceeds from issuance of long-term debt and common stock, financing leases, the sale of certain receivables, financing arrangements of vendor payables which effectively extend payment terms and secured and unsecured revolving credit facilities with DT. Upon consummation of the Transactions, we will incur substantial third-party indebtedness which will increase our future financial commitments, including aggregate interest payments on higher total indebtedness, and may adversely impact our liquidity. Further, the incurrence of additional indebtedness may inhibit our ability to incur new debt under the terms governing our existing and future indebtedness, which may make it more difficult for us to incur new debt in the future to finance our business strategy.

We may seek additional sources of liquidity, including through the issuance of additional long-term debt in 2019, to continue to opportunistically acquire spectrum licenses or other assets in private party transactions or for the refinancing of existing long-term debt on an opportunistic basis. Excluding liquidity that could be needed for spectrum acquisitions, or for other assets, we expect our principal sources of funding to be sufficient to meet our anticipated liquidity needs for business operations for the next 12 months as well as our longer-term liquidity needs. Our intended use of any such funds is for general corporate purposes, including for capital expenditures, spectrum purchases, opportunistic investments and acquisitions, redemption of high yield callable debt and stock purchases.

The indentures and credit facilities governing our long-term debt to affiliates and third parties, excluding capital leases, contain covenants that, among other things, limit the ability of the Issuer and the Guarantor Subsidiaries to incur more debt, pay dividends and make distributions on our common stock, make certain investments, repurchase stock, create liens or other encumbrances, enter into transactions with affiliates, enter into transactions that restrict dividends or distributions from subsidiaries, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets. Certain provisions of each of the credit facilities, indentures and supplemental indentures relating to the long-term debt to affiliates and third parties restrict the ability of the Issuer to loan funds or make payments to the Parent. However, the Issuer is allowed to make certain permitted payments to the Parent under the terms of each of the credit facilities, indentures and supplemental indentures relating to the long-term debt to affiliates and third parties. We were in compliance with all restrictive debt covenants as of September 30, 2019.

Our liquidity requirements have been driven primarily by capital expenditures for spectrum licenses and the construction, expansion and upgrading of our network infrastructure. Property and equipment capital expenditures primarily relate to our network transformation, including the build-out of our network to utilize our 600 MHz spectrum licenses. We expect cash purchases of property and equipment, excluding capitalized interest of approximately $450 million (up from prior guidance of $400 million), to be in the range of $5.9 to $6.0 billion for 2019, up $200 to $300 million from the high end of the prior guidance range. We expect cash purchases of property and equipment, including capitalized interest, to be in the range of $6.35 to $6.45 billion in 2019, up from the prior guidance range of $5.8 to $6.1 billion. The higher capital expenditures guidance reflects our rapid rollout of 600 MHz spectrum, setting the foundation for our accelerated plans to launch the first nationwide 5G network later this year. This does not include property and equipment obtained through financing lease agreements, vendor financing agreements, leased wireless devices transferred from inventory or any additional purchases of spectrum licenses.

DT, through certain of its non-U.S. subsidiaries, is party to roaming and interconnect agreements with the following mobile and fixed line telecommunication providers in Iran, some of which are or may be government-controlled entities: MTN Irancell, Telecommunication Kish Company, Mobile Telecommunication Company of Iran, and Telecommunication Infrastructure Company of Iran. In addition, during the three months ended September 30, 2019, DT, through certain of its non-U.S. subsidiaries, provided basic telecommunications services to three customers in Germany identified on the Specially Designated Nationals and Blocked Persons List maintained by the U.S. Department of Treasury’s Office of Foreign Assets Control: Bank Melli, Bank Sepah, and Europäisch-Iranische Handelsbank. These services have been terminated or are in the process of being terminated. For the three months ended September 30, 2019, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with the Iranian parties identified herein were less than $0.1 million, and the estimated net profits were less than $0.1 million.

The completion of the Transactions is subject to a number of conditions, including, among others, obtaining certain governmental authorizations, consents, orders or other approvals, and the absence of any injunction prohibiting the Transactions or any legal requirements enacted by a court or other governmental entity preventing the completion of the Transactions. In connection with these required approvals, we have agreed to significant actions and conditions, including the planned divestiture of Sprint’s prepaid wireless businesses to DISH Network Corporation and ongoing commercial and transition services arrangements to be entered into in connection with such divestiture, which we and Sprint announced on July 26, 2019 (the “Divestiture Transaction”), a stipulation and order and proposed final judgment with the U.S. Department of Justice, which we and Sprint announced on July 26, 2019 (the “Consent Decree”), the proposed commitments contained in the ex parte presentation filed with the Secretary of the FCC, which we and Sprint announced on May 20, 2019 (the “FCC Commitments”) and any commitments and undertakings we have entered into, and may in the future enter into, with governmental authorities at the federal and state level (collectively, with the Consent Decree and the FCC Commitments, the “Government Commitments”). There is no assurance that the remaining required authorizations, consents, orders or other approvals will be obtained or that they will be obtained in a timely manner, or whether they will be subject to additional required actions, conditions, limitations or restrictions on the combined company’s business, operations or assets. In addition, the attorneys general of certain states and the District of Columbia have commenced litigation seeking an order prohibiting the consummation of the Transactions. Such litigation, and such required actions, conditions, limitations and restrictions, may jeopardize or delay completion of the Transactions, reduce or delay the anticipated benefits of the Transactions or allow the parties to the Business Combination Agreement to terminate the Business Combination Agreement, which could result in a material adverse effect on our or the combined company’s business, financial condition or operating results. In addition, the completion of the Transactions is also subject to T-Mobile USA having specified minimum credit ratings on the closing date of the Transactions (after giving effect to the Merger) from at least two of three specified credit rating agencies, subject to certain qualifications. In the event that we terminate the Business Combination Agreement in connection with a failure to satisfy the closing condition related to the specified minimum credit ratings, then in certain circumstances, we may be required to pay Sprint an amount equal to $600 million. If the Transactions are not completed by November 1, 2019 (or, if the Marketing Period (as defined in the Business Combination Agreement) has started and is in effect at such date, then January 2, 2020), or if there is a final and non-appealable order or injunction preventing the consummation of the Transactions, either we or Sprint may terminate the Business Combination Agreement. The Business Combination Agreement may also be terminated if the other conditions to closing are not satisfied, and we and Sprint may also mutually decide to terminate the Business Combination Agreement.

Uncertainty about the effect of the Transactions on employees, customers, suppliers, vendors, distributors, dealers and retailers may have an adverse effect on us or the combined company. These uncertainties may impair the ability to attract, retain and motivate key personnel during the pendency of the Transactions and, if the Transactions are completed, for a period of time thereafter, as existing and prospective employees may experience uncertainty about their future roles with the combined company. If key employees depart because of issues related to the uncertainty and difficulty of integration or a desire not to remain with the combined company, the combined company’s business following the completion of the Transactions could be negatively impacted. We or the combined company may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent. Additionally, these uncertainties could cause customers, suppliers, distributors, dealers, retailers and others to seek to change or cancel existing business relationships with us or the combined company or fail to renew existing relationships. Suppliers, distributors and content and application providers may also delay or cease developing for us or the combined company new products that are necessary for the operations of its business due to the uncertainty created by the Transactions. Competitors may also target our existing customers by highlighting potential uncertainties and integration difficulties that may result from the Transactions.

Certain of our directors and executive officers negotiated the terms of the Business Combination Agreement. Our directors and executive officers may have interests in the Transactions that are different from, or in addition to, those of our stockholders. These interests include, but are not limited to, the continued service of certain of our directors as directors of the combined company, the continued employment of certain of our executive officers by the combined company, severance arrangements and employment terms linked to the Transactions and other rights held by our directors and executive officers, and provisions in the Business Combination Agreement regarding continued indemnification of and advancement of expenses to our directors and officers.

Our ability to realize the anticipated benefits of the Transactions will depend, to a large extent, on the combined company’s ability to integrate our and Sprint’s businesses in a manner that facilitates growth opportunities and achieves the projected standalone cost savings and revenue growth trends identified by each company without adversely affecting current revenues and investments in future growth. In addition, some of the anticipated synergies are not expected to occur for a significant time period following the completion of the Transactions and will require substantial capital expenditures in the near term to be fully realized. Even if the combined company is able to integrate the two companies successfully, the anticipated benefits of the Transactions, including the expected synergies and network benefits, may not be realized fully or at all or may take longer to realize than expected.

The combination of two independent businesses is complex, costly and time-consuming and may divert significant management attention and resources to combining our and Sprint’s business practices and operations. This process, as well as the Divestiture Transaction and the Government Commitments, may disrupt our business. The failure to meet the challenges involved in combining our and Sprint’s businesses and to realize the anticipated benefits of the Transactions could cause an interruption of, or a loss of momentum in, the activities of the combined company and could adversely affect the results of operations of the combined company. The overall combination of our and Sprint’s businesses, the completion of the Divestiture Transaction and compliance with the Government Commitments may also result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customer and other business relationships. The difficulties of combining the operations of the companies, completing the Divestiture Transaction and satisfying all of the Government Commitments include, among others:

Some of these factors are outside of our control and/or will be outside the control of the combined company, and any one of them could result in lower revenues, higher costs and diversion of management time and energy, which could materially impact the business, financial condition and results of operations of the combined company. In addition, even if the operations of our and Sprint’s businesses are integrated successfully, the full benefits of the Merger may not be realized, including, among others, the synergies, cost savings or sales or growth opportunities that are expected, including as a result of the Divestiture Transaction, the Government Commitments and/or the other actions and conditions we have agreed to in connection with the Transactions, or otherwise. These benefits may not be achieved within the anticipated time frame or at all. Further, additional unanticipated costs may be incurred in the integration of our and Sprint’s businesses and in connection with the Divestiture Transaction and the Government Commitments, including potential penalties that could arise if we fail to fulfill our obligations thereunder. All of these factors could cause dilution to the earnings per share of the combined company, decrease or delay the projected accretive effect of the Merger, and negatively impact the price of our common stock following the Merger. As a result, it cannot be assured that the combination of T-Mobile and Sprint will result in the realization of the full benefits expected from the Transactions within the anticipated time frames or at all.

Our substantially increased indebtedness following the Transactions could have the effect, among other things, of reducing our flexibility to respond to changing business, economic, market and industry conditions and increasing the amount of cash required to meet interest payments. In addition, this increased level of indebtedness following the Transactions may reduce funds available to support efforts to combine our and Sprint’s businesses and realize the expected benefits of the Transactions, and may also reduce funds available for capital expenditures, share repurchases and other activities that may put the combined company at a competitive disadvantage relative to other companies with lower debt levels. Further, it may be necessary for the combined company to incur substantial additional indebtedness in the future, subject to the restrictions contained in its debt instruments, which could increase the risks associated with the capital structure of the combined company.

The ability of the combined company to service its substantial debt obligations following the Transactions will depend in part on future performance, which will be affected by business, economic, market and industry conditions and other factors, including the ability of the combined company to achieve the expected benefits of the Transactions. There is no guarantee that the combined company will be able to generate sufficient cash flow to service its debt obligations when due. If the combined company is unable to meet such obligations or fails to comply with the financial and other restrictive covenants contained in the agreements governing such debt obligations, it may be required to refinance all or part of its debt, sell important strategic assets at unfavorable prices or make additional borrowings. The combined company may not be able to, at any given time, refinance its debt, sell assets or make additional borrowings on commercially reasonable terms or at all, which could have a material adverse effect on its business, financial condition and results of operations after the Transactions.

Some or all of the combined company’s variable-rate indebtedness may use LIBOR as a benchmark for establishing the rate. LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressures may cause LIBOR to disappear entirely or to perform differently than in the past. The consequence of these developments cannot be entirely predicted, but could include an increase in the cost of our variable rate indebtedness. In addition, any hedging agreements we have and may continue to enter into to limit our exposure to interest rate increases or foreign currency fluctuations may not offer complete protection from these risks or may be unsuccessful, and consequently may effectively increase the interest rate we pay on our debt or the exchange rate with respect to such debt, and any portion not subject to such hedging agreements would have full exposure to interest rate increases or foreign currency fluctuations, as applicable. If any financial institutions that are parties to our hedging agreements were to default on their payment obligations to us, declare bankruptcy or become insolvent, we would be unhedged against the underlying exposures. Any of these risks could have a material adverse effect on our business, financial condition and operating results.

These restrictions could limit the combined company’s ability to obtain debt financing, make share repurchases, refinance or pay principal on its outstanding indebtedness, complete acquisitions for cash or indebtedness or react to business, economic, market and industry conditions and other changes in its operating environment or the economy. Any future indebtedness that the combined company incurs may contain similar or more restrictive covenants. Any failure to comply with the restrictions of the combined company’s debt agreements may result in an event of default under these agreements, which in turn may result in defaults or acceleration of obligations under these and other agreements, giving the combined company’s lenders the right to terminate any commitments they had made to provide it with further funds and to require the combined company to repay all amounts then outstanding.

In particular, we have received commitments for $27.0 billion in debt financing to fund the Transactions, which is comprised of (i) a $4.0 billion secured revolving credit facility, (ii) a $4.0 billion term loan credit facility and (iii) a $19.0 billion secured bridge loan facility. Our reliance on the financing from the $19.0 billion secured bridge loan facility commitment is intended to be reduced through one or more secured note offerings or other long-term financings prior to the Merger closing. However, there can be no assurance that we will be able to issue any such secured notes or other long-term financings on terms we find acceptable or at all, especially in light of recent debt market volatility, in which case we may have to exercise some or all of the commitments under the secured bridge facility to fund the Transactions. Accordingly, the costs of financing for the Transactions may be higher than expected.



Delaware		20-0836269
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



(425)	378-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.00001 per share	TMUS	The NASDAQ Stock Market LLC



Class		Shares Outstanding as of October 23, 2019
Common Stock, par value $0.00001 per share		855,574,798



PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	3
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Comprehensive Income	4
		Condensed Consolidated Statements of Cash Flows	5
		Consolidated Statement of Stockholders’ Equity	6
		Notes to the Condensed Consolidated Financial Statements	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	64
	Item 4.	Controls and Procedures	64

PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	65
	Item 1A.	Risk Factors	65
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
	Item 3.	Defaults Upon Senior Securities	70
	Item 4.	Mine Safety Disclosures	70
	Item 5.	Other Information	70
	Item 6.	Exhibits	71
		SIGNATURE	72



Note 1	Summary of Significant Accounting Policies	9
Note 2	Significant Transactions	12
Note 3	Business Combinations	13
Note 4	Receivables and Allowance for Credit Losses	15
Note 5	Sales of Certain Receivables	17
Note 6	Spectrum License Transactions	19
Note 7	Fair Value Measurements	20
Note 8	Tower Obligations	22
Note 9	Revenue from Contracts with Customers	23
Note 10	Earnings Per Share	25
Note 11	Leases	25
Note 12	Commitments and Contingencies	28
Note 13	Guarantor Financial Information	29


•	We recognized right-of-use assets and operating lease liabilities for operating leases that have not previously been recorded. The lease liability for operating leases is based on the net present value of future minimum lease payments.


•	Capital lease assets previously included within Property and equipment, net were reclassified to financing lease right-of-use assets, and capital lease liabilities previously included in Short-term debt and Long-term debt were reclassified to financing lease liabilities in our Condensed Consolidated Balance Sheet.


•	In determining the discount rate used to measure the right-of-use asset and lease liability, we use rates implicit in the lease, or if not readily available, we use our incremental borrowing rate. Our incremental borrowing rate is based on an estimated secured rate comprised of a risk-free LIBOR rate plus a credit spread as secured by our assets.


•	We were also required to reassess the previously failed sale-leasebacks of certain T-Mobile-owned wireless communication tower sites and determine whether the transfer of the assets to the tower operator under the arrangement met the transfer of control criteria in the revenue standard and whether a sale should be recognized.


•	We concluded that a sale has not occurred for the 6,200 tower sites transferred to Crown Castle International Corp. (“CCI”) pursuant to a master prepaid lease arrangement; therefore, these sites will continue to be accounted for as failed sale-leasebacks.


•	Rental revenues and expenses associated with co-location tower sites are presented on a net basis under the new lease standard. These revenues and expenses were presented on a gross basis under the former lease standard.



	January 1, 2019
(in millions)	Beginning Balance			Cumulative Effect Adjustment			Beginning Balance, As Adjusted
Assets
Other current assets	$	1,676		$	(78	)	$	1,598
Property and equipment, net	23,359			(2,339		)	21,020
Operating lease right-of-use assets	—			9,251			9,251
Financing lease right-of-use assets	—			2,271			2,271
Other intangible assets, net	198			(12		)	186
Other assets	1,623			(71		)	1,552
Liabilities and Stockholders’ Equity
Accounts payable and accrued liabilities	7,741			(65		)	7,676
Other current liabilities	787			28			815
Short-term and long-term debt	12,965			(2,015		)	10,950
Tower obligations	2,557			(345		)	2,212
Deferred tax liabilities	4,472			231			4,703
Deferred rent expense	2,781			(2,781		)	—
Short-term and long-term operating lease liabilities	—			11,364			11,364
Short-term and long-term financing lease liabilities	—			2,016			2,016
Other long-term liabilities	967			(64		)	903
Accumulated deficit	$	(12,954	)	$	653		$	(12,301	)


•	The aggregate impact is a decrease in Other revenues of $185 million, a decrease in Total operating expenses of $380 million, a decrease in Interest expense of $34 million and an increase to Net income of $175 million.


•	The expected impact on our Condensed Consolidated Statements of Cash Flows is a decrease in Net cash provided by operating activities of $10 million and a decrease in Net cash used in financing activities of $10 million.



	September 30, 2019						December 31, 2018
(in millions)	Prime		Subprime		Total EIP Receivables, gross		Prime		Subprime		Total EIP Receivables, gross
Current - 30 days past due	$	2,178	$	2,021	$	4,199	$	1,987	$	2,446	$	4,433
31 - 60 days past due	13		26		39		15		32		47
61 - 90 days past due	6		17		23		6		19		25
More than 90 days past due	7		21		28		7		22		29
Total receivables, gross	$	2,204	$	2,085	$	4,289	$	2,015	$	2,519	$	4,534



	September 30, 2019									September 30, 2018
(in millions)	Accounts Receivable Allowance			EIP Receivables Allowance			Total			Accounts Receivable Allowance			EIP Receivables Allowance			Total
Allowance for credit losses and imputed discount, beginning of period	$	67		$	449		$	516		$	86		$	396		$	482
Bad debt expense	51			167			218			46			163			209
Write-offs, net of recoveries	(57		)	(185		)	(242		)	(62		)	(179		)	(241		)
Change in imputed discount on short-term and long-term EIP receivables	N/A			91			91			N/A			155			155
Impact on the imputed discount from sales of EIP receivables	N/A			(127		)	(127		)	N/A			(146		)	(146		)
Allowance for credit losses and imputed discount, end of period	$	61		$	395		$	456		$	70		$	389		$	459



(in millions)	2019
Balance at December 31, 2018	$	35,559
Spectrum license acquisitions	857
Spectrum licenses transferred to held for sale	—
Costs to clear spectrum	26
Balance at September 30, 2019	$	36,442



	Level within the Fair Value Hierarchy	September 30, 2019				December 31, 2018
(in millions)	Level within the Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Deferred purchase price assets	3	$	782	$	782	$	746	$	746


•	Branded postpaid customers generally include customers who are qualified to pay after receiving wireless communication services utilizing phones, wearables, DIGITS, or connected devices which includes tablets and SyncUP DRIVE™;


•	Branded prepaid customers generally include customers who pay for wireless communication services in advance. Our branded prepaid customers include customers of T-Mobile and Metro by T-Mobile; and


•	Wholesale customers include Machine-to-Machine (“M2M”) and Mobile Virtual Network Operator (“MVNO”) customers that operate on our network but are managed by wholesale partners.



(in millions)	Contract Assets		Contract Liabilities
Balance as of December 31, 2018	$	51	$	645
Balance as of September 30, 2019	55		550
Change	$	4	$	(95	)



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except shares and per share amounts)	2019		2018		2019		2018
Net income	$	870	$	795	$	2,717	$	2,248

Weighted average shares outstanding - basic	854,578,241		847,087,120		853,391,370		849,960,290
Effect of dilutive securities:
Outstanding stock options and unvested stock awards	8,112,510		6,765,644		9,463,284		8,288,278
Weighted average shares outstanding - diluted	862,690,751		853,852,764		862,854,654		858,248,568

Earnings per share - basic	$	1.02	$	0.94	$	3.18	$	2.65
Earnings per share - diluted	$	1.01	$	0.93	$	3.15	$	2.62

Potentially dilutive securities:
Outstanding stock options and unvested stock awards	241		537,810		30,314		779,644



(in millions)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease expense	$	657	$	1,893
Financing lease expense:
Amortization of right-of-use assets	146		376
Interest on lease liabilities	21		61
Total financing lease expense	167		437
Variable lease expense	62		185
Total lease expense	$	886	$	2,515



	September 30, 2019
Weighted Average Remaining Lease Term (Years)
Operating leases	6
Financing leases	3
Weighted Average Discount Rate
Operating leases	4.9	%
Financing leases	4.3	%



(in millions)	Operating Leases		Finance Leases
Twelve Months Ending September 30,
2020	$	2,716	$	1,073
2021	2,557		764
2022	2,311		467
2023	1,905		102
2024	1,602		75
Thereafter	4,009		131
Total lease payments	$	15,100	$	2,612
Less imputed interest	2,254		159
Total	$	12,846	$	2,453



(in millions)	Total
Year Ended December 31,
2019	$	419
2020	59
Total	$	478



(in millions)	Future Minimum Payments
Year Ended December 31,
2019	$	909
2020	631
2021	389
2022	102
2023	66
Thereafter	106
Total	$	2,203
Included in Total
Interest	$	143
Maintenance	45



(in millions)	Parent		Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating and Eliminating Adjustments			Consolidated
Assets
Current assets
Cash and cash equivalents	$	5	$	1	$	1,539	$	108		$	—		$	1,653
Accounts receivable, net	—		—		1,524		298			—			1,822
Equipment installment plan receivables, net	—		—		2,425		—			—			2,425
Accounts receivable from affiliates	—		5		20		—			(5		)	20
Inventory	—		—		801		—			—			801
Other current assets	—		—		1,042		695			—			1,737
Total current assets	5		6		7,351		1,101			(5		)	8,458
Property and equipment, net ⁽¹⁾	—		—		21,891		207			—			22,098
Operating lease right-of-use assets	—		—		10,914		—			—			10,914
Financing lease right-of-use assets	—		—		2,855		—			—			2,855
Goodwill	—		—		1,930		—			—			1,930
Spectrum licenses	—		—		36,442		—			—			36,442
Other intangible assets, net	—		—		144		—			—			144
Investments in subsidiaries, net	27,946		50,500		—		—			(78,446		)	—
Intercompany receivables and note receivables	—		4,603		—		—			(4,603		)	—
Equipment installment plan receivables due after one year, net	—		—		1,469		—			—			1,469
Other assets	—		9		1,720		210			(140		)	1,799
Total assets	$	27,951	$	55,118	$	84,716	$	1,518		$	(83,194	)	$	86,109
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	—	$	136	$	6,005	$	265		$	—		$	6,406
Payables to affiliates	—		177		80		—			(5		)	252
Short-term debt	—		475		—		—			—			475
Deferred revenue	—		—		608		—			—			608
Short-term operating lease liabilities	—		—		2,232		—			—			2,232
Short-term financing lease liabilities	—		—		1,013		—			—			1,013
Other current liabilities	—		1,442		145		296			—			1,883
Total current liabilities	—		2,230		10,083		561			(5		)	12,869
Long-term debt	—		10,956		—		—			—			10,956
Long-term debt to affiliates	—		13,986		—		—			—			13,986
Tower obligations ⁽¹⁾	—		—		75		2,166			—			2,241
Deferred tax liabilities	—		—		5,436		—			(140		)	5,296
Operating lease liabilities	—		—		10,614		—			—			10,614
Financing lease liabilities	—		—		1,440		—			—			1,440
Negative carrying value of subsidiaries, net	—		—		787		—			(787		)	—
Intercompany payables and debt	180		—		4,075		348			(4,603		)	—
Other long-term liabilities	—		—		915		21			—			936
Total long-term liabilities	180		24,942		23,342		2,535			(5,530		)	45,469
Total stockholders' equity (deficit)	27,771		27,946		51,291		(1,578		)	(77,659		)	27,771
Total liabilities and stockholders' equity	$	27,951	$	55,118	$	84,716	$	1,518		$	(83,194	)	$	86,109


(1)	Assets and liabilities for Non-Guarantor Subsidiaries are primarily included in VIEs related to the 2012 Tower Transaction. See Note 8 – Tower Obligations for further information.


•	the occurrence of events that may give rise to a right of one or both of the parties to terminate the Business Combination Agreement;


•	adverse effects on the market price of our common stock or on our operating results because of a failure to complete the Merger in the anticipated timeframe, on the anticipated terms or at all;


•	inability to obtain the financing contemplated to be obtained in connection with the Transactions on the expected terms or timing or at all;


•	the ability of us, Sprint and the combined company to make payments on debt or to repay existing or future indebtedness when due or to comply with the covenants contained therein;


•	adverse changes in the ratings of our or Sprint’s debt securities or adverse conditions in the credit markets;